Initiatives to Expand Business Through DX

Masaharu Hamaguchi

Associate Director & Head of Advanced Development Center
Advanced Development Center, Engineering Division& Solution Integration SE Department
OKI Electric Industry Co., Ltd.

Initiatives toward digital transformation (DX) are currently
attracting wide attention in Japan and abroad. DX has beenvariously explained by various entities. In Japan, the Guidelines forPromoting Digital Transformation*1 published by the Ministry ofEconomy, Trade and Industry in 2018 define DX as follows.
“Companies leveraging data and digital technology
to transform products, services and business models based on
customer and social needs, as well as transforming business,organizations, processes, and corporate culture to establish
competitive advantage, in response to the drastic changes inbusiness environment.”
According to this definition, DX is an activity that establishes
competitive advantage through the use of data and digitaltechnology, and is premised on the transformation of businessmodels. It also calls for the transformation of the business itself,
the organization, the processes, and the corporate culture.
This article provides an overview of OKI's initiatives toexpand business through DX, including some examples.

1. Promoting DX

Figure 1 shows the relationship between the progress ofdigitization and DX as envisioned by OKI. On the basis ofdigitization through the digitization of data, we will aim toachieve digitalization aimed at transforming business models,from digitization of business processes. DX is an activity aimed at
the wide social implementation of these transformations. Behind■ Figure 1: Progress of digitization and DX

the progress of digitization are the diversification of businessmodels, the shift from entity-oriented consumption to situationoriented consumption, the aging of various infrastructures, andthe labor shortage. We are envisioning the deployment of IoT, AI,cloud, 5G, and Local 5G as digital technologies to bring aboutDX.
OKI is promoting DX with the goal of doubling sales in theDX domain in FY2022 compared to FY2019 and laying thefoundation for business expansion through DX in FY2023 andbeyond. The main strategies for our DX activities are as follows.
-	External strengthening: Entering new markets through AIedge strategies, reinforcing the creation of new solutions, andenhancing existing solutions through IT modernization-	Internal strengthening: Nurturing human resources throughorganizational reforms, strengthening innovation capabilities,
and improving productivity through business process reforms.
We believe these strategies can be applied to all companies
promoting DX.
From these strategies, I will introduce the ecosystem initiatives
that are being implemented as external activities. OKI leverages its
technological strengths in AI edge and its relationships with cocreation partners, AI edge partners, and open innovation partners
in various fields to promote the social implementation andbusiness expansion of DX through OKI's unique DX solutions inthe edge domain. We consider this as our DX ecosystem, as shownin Figure 2. As of November 2021, we have 93 co-creation partnercompanies and 102 AI edge partner companies.
■ Figure 2: Figure 2. DX Ecosystem＊1 https://www.meti.go.jp/policy/it_policy/investment/dgc/dgc.html(Guidelines for Promoting Digital Transformation was succeeded to the Digital Governance Code 2.0 with the Digital Governance Code in 2022)

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In July 2021, OKI was certified as a Digital-TransformationCertified Operator by the Ministry of Economy, Trade andIndustry, acknowledging it as a DX-ready company that is
poised to achieve new growth in the Society 5.0 era. The Digital
Transformation certification system is a system under which
the government certifies companies that comply with the basic
requirements of the Digital Governance Code*2 based on theAct on Facilitation of Information Processing. The certification
was granted in recognition of our group-wide efforts for digitaltransformation and information dissemination, including theunique innovation activities based on the Medium-Term Business
Plan 2022 and the shift to smart factories. Figure 3 shows theprocess for acquiring certification as a DX-Certified Operator.
It also shows an overview of OKI's initiatives as a DigitalTransformation-Certified Operator.
■ Figure 3: Acquisition of certification as DigitalTransformation-Certified Operator

2. DX Domains
Figure 4 shows the DX domains that the Solution Systems
Business Group is engaged in. Our activities are organized
into three domains: public solutions, enterprise solutions, andplatforms. Under these, the company aims to establish competitive
advantage particularly in transportation, disaster prevention,
construction/infrastructure, marine, finance, distribution, andmanufacturing, as the focus areas. Going forward, we plan tofurther expand these DX domains by entering new markets andcreating new solutions.
As a concrete example of DX, I will introduce our initiatives
in smart factories. Figure 5 shows an example of Virtual One
Factory initiatives. Each factory had been individually optimized
to produce equipment in a specific domain. However, in responseto the recent changes in the supply chain, such as the need forbusiness continuity during disasters and pandemics and for
responding to demand variability due to economic fluctuations,etc., it has become imperative to construct an optimal productionsystem as a whole, wherein individual factories can complement
each other. Therefore, taking this as an opportunity to address
the aging of the system as well, we are working to create smart
factories that operate collectively and virtually as "One Factory."
Figure 6 shows an example of our manufacturing DX
initiatives. Shown is a new production process for implementing
the virtual One Factory. The factory edge platform utilizes IoT
and AI to digitalize on-site data in order to digitalize the knowhow of skilled engineers and improve productivity and quality.

■ Figure 4: Domains for DX initiatives in the solution system business＊2 https://www.meti.go.jp/policy/it_policy/investment/dx-nintei/dx-nintei.html＊3 VICS is a registered trademark of the Vehicle Information and Communication System Center.

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■ Figure 5: Example of Virtual One Factory initiatives■ Figure 6: Example of Manufacturing DX initiatives

Also, using advanced networks such as Local 5G will makeit possible to flexibly construct production lines for high-mix
manufacturing and to visualize production status through highsecurity and high-speed transfer of image processing data. Goingforward, we will deploy solutions for smart factories based on
success stories of our manufacturing industry process reforms.
OKI constructed a new building at its Honjo Plant as the firststep toward making its factories smarter. In the new building,which was completed in July 2022, IoT/AI and local 5G wereintroduced to the production and assembly sites to digitally
visualize on-site data and know-how and improve productivity,
quality, and technical capabilities. In addition to making theproduction system smarter, the company is also working on

creating a Zero Energy Factory (ZEF) with the aim of making theentire factory smarter and environment friendly. We aim to reduceenergy consumption not only in the office buildings but also in theentire factory, including the production facilities.

3. DX promotion management

We have set up a DX Expansion Task Force within theBusiness Group to manage DX promotion activities, while sharing
information and coordinating activities with other departments
within the company (Marketing & Sales Group and Innovation
Promotion Center). Figure 7 shows the management of DX
promotion.
For the management of DX promotion, a common format＊4 Halcon is a registered trademark of MVTec Software GmbH.
＊5 Google Cloud is a trademark or registered trademark of Google LLC in the U.S and other countries.

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■ Figure 7: Management of DX promotion

is specified as the "dashboard" for the management of activity
information, and a method is being tried to manage data
created and updated by each business division into a database.
Constructing a database in a common format enables flexible
analysis of activities. Also, the centralized management of thedatabase facilitates information sharing between departments,
leading to the creation of new solutions through cooperation
between departments. Likewise, this management approachis expected to lead to operational and cultural reforms in eachdivision.
We believe that DX is almost synonymous with digital
innovation, and efforts to expand DX are equivalent to initiatives
aimed at innovation using digital technology. In this management
approach, we have adopted the five innovation processes of"identification of opportunities," "creation of concept," "proofof concept," "development of solutions," and "introductionof solutions" into a process management that is linked to theinnovation management system (IMS), which we have been
implementing across the entire company since 2017. Theseactivities are aimed at the full-scale introduction of ISO56002.
OKI's "Yume Pro" IMS, which is ahead of ISO56002, focuses on
the social issues raised in the SDGs, and will be used to reform theabove-mentioned business processes and business models*6.

4. Future initiatives

Above I have introduced initiatives for business expansion
through DX, the key points of which are "innovation activities,""co-creation partnership," and "expansion of DX domains." As＊6 https://www.oki.com/jp/press/2020/12/z20092.html

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the two pillars of the expansion of our DX business, the company
plans to "enter new markets/create new solutions" and "strengthen
existing solutions" through external strengthening such as
by ensuring competitive advantage through the use of digitaltechnology and by reforming business models. The company alsoplans to carry out internal strengthening through transformationof business processes, organizations, and corporate culture.
In addition, we will actively disseminate information toexpand our DX business, focusing on introducing DX case studies
and co-creation cases, and on online promotion. Figure 8 shows
an overview of the AI Edge Conference & Solutions Contest
held in December 2021. The event is a competition of ideas andtechnologies to solve social issues in various industries using
OKI's AI edge computer "AE2100," and is one of the company’sinitiatives aimed at business expansion through DX.
■ Figure 8: AI Edge Conference & Solutions Contest